Is Cryptocurrency the Future of Money?

Is there a place for cryptocurrency in our lives? With a market value of over 100 billion dollars 1, cryptocurrencies are not some fad going away. They are here to stay, but for all the popularity Bitcoin, and its companions, are getting cryptocurrencies seem pretty unpopular. Bitcoin has around 8 million users 2, which is less than one hundredth of a percent of the world. For something being called “the future of money” 3 4, cryptocurrencies seem pretty small. The reason for this is simple: most people don’t understand or care about this new technology.

The ‘average Joe’ would not notice the difference between having their money in a Blockchain or in a bank. This is a problem for the future of cryptocurrency. How can something so revolutionary expect to change the way we spend money if the majority of the world does not understand how it works, or why they should use it.

 

Today, cryptocurrencies give us a few abilities that are impossible with conventional money 5:

  1. We can be anonymous and impossible to track while spending virtual ‘coins’.
  2. We don’t have to worry about international law or exchange rates when using cryptocurrencies overseas.
  3. It is impossible to double dip or print money in a Blockchain.
  4. The security of cryptocurrency relies on a decentralized network, meaning there is no need for a central authority.

These are valuable features when it comes to money, but they are features that most people do not care about. The banks and governments today manage most, if not all, of the backend tools in our financial systems giving us no incentive to leave them. Everything cryptocurrency offers is already imitated with ‘real’ money and available to us.  As of right now, there is no place for cryptocurrencies in our lives because there is no incentive for us to use them.

 

Despite this, not all hope is lost. Cryptocurrencies have a future, but to understand this future we need to understand the digital world a little better. The internet was revolutionary because it gave us the ability to share virtual media indefinitely. I could take a song and give an exact copy to thousands of people. Anything that could be represented or created on a computer could be recreated on any other computer. An entire world was created using ones and zeroes, a world that everyone could live in no matter where they were. The internet is amazing for communication and consumption, but not for money.

 

Money that can be copied loses all value. Money thrives on the fact that it is limited and can only have one owner at a time. This is why cryptocurrency was so revolutionary, it placed money on the internet. This revolution was due to a single paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” written by Satoshi Nakamoto 6. He created the Blockchain, an internet for money.

 

Mr. Nakamoto made an internet where you cannot copy, thus allowing money to exist online. Having the capability to make money digital is a powerful thing: digital money can be sent anywhere instantaneously, it can have information attached to it, and is not limited by any physical restrictions. Bitcoin, Ethereum, and the nine hundred other cryptocurrencies out there 7, use digital money, but they don’t take full advantage of its potential. This is where the future of cryptocurrency lies.

 

Today, we don’t have room for cryptocurrencies in our lives because they offer nothing new. They have simply placed money online, and that is meaningless to the average person. Banks and governments are interested in Blockchain because it can make their lives easier, but the masses spend money without worrying about how that money navigates the labyrinth of payment services to get to the proper recipient. The future consists of more than having money online.

 

The future transforms money, taking advantage of its digital state. Digital entities exists outside of our physical economy, they are amorphous. Due to this, digital money should not be confined to the value and function of physical money. The future of cryptocurrency lies not in Bitcoin or any of its copies, but in the idea that money no longer has to be tethered to the real world. That idea is truly revolutionary and will lead us to a future where cryptocurrencies not only have a place in our lives, but are an essential tool in our lives.

 

Do we have a place for cryptocurrencies in our lives? Not yet, but you can be sure that we will. Money is changing drastically in how it works, how we think of it, and what it can do. We may not know how it will look in the future, but we know where it will be: online. Cryptocurrency is undoubtedly the future of money. 

References:

1) https://en.wikipedia.org/wiki/Cryptocurrency
2) https://blockchain.info/
3) https://www.bbc.com/news/business-27200665
4) https://www.forbes.com/sites/laura-inamedinova/2015/12/30/cryptocurrency-is-the-future-oflithuanias-economy/#2f253615398b
5) http://www.telegraph.co.uk/technology/0/cryptocurrency/
6) https://bitcoin.org/bitcoin.pdf
7) https://coinmarketcap.com/currencies/views/all/